FOOD FACTOR:
Why in the news?
Food inflation’s impact on personal consumption underscores economic challenges, requiring policy measures to ensure stability and growth.
source:imocsquad
About Impact of Inflation on Personal Consumption:
- Retail inflation data highlights the ongoing impact of volatile food prices on broader inflation and personal consumption, a key driver of economic growth.
- February’s Consumer Price Index (CPI) remained stable at 5.09%, but food price gains surged by 36 basis points to 8.66%, led by vegetables.
- The potato-onion-tomato trio, a significant part of food consumption, witnessed substantial price hikes, posing challenges for consumers and policymakers alike.
What is the Consumer Price Index (CPI)?
● Tracks the shift in retail prices of essential goods and services consumed by households nationwide. ● Measures changes in the price level of a basket of consumer goods and services purchased by households. ● Numerical estimation calculated using representative sample prices collected periodically. Key Differences with Wholesale Price Index (WPI): ● CPI captures changes in price level at the consumer level, while WPI tracks changes at the producer level. ● CPI can include price changes of services, unlike WPI. ● The Reserve Bank of India (RBI) uses CPI and WPI to calculate in |